5G to lead smartphone market growth in 2020: Counterpoint

Counterpoint Research has claimed that 5G phones will help in smartphone market growth in the next year. The market research firm also estimated that smartphone shipments in 2019 will decline by 3 per....

Telecom giants and 5G equipment manufacturers converged at the recently-concluded India Mobile Congress (IMC). The main theme of the event revolved around 5G and companies like OnePlus, and Samsung showcased how the next generation of cellular network technology is likely to work on future phones. On similar lines, Counterpoint Research has said that this technology will help in growth of smartphone sales in 2020.

‘Launch of 5G devices and services, as well as growing demand in emerging markets, like India, Russia, Indonesia, will help the global smartphone market return to growth in 2020,’ Counterpoint Research said in a report. For the unaware, the smartphone market has been experiencing slow sales, and the year 2019 wasn’t different.

‘So far, in 2019, the mobile phone market faced a slowdown as many developed markets have broadly transitioned to 4G networks and smartphones. The launch of 5G services in 2019 will bring some relief to OEMs and reduce the quantum of market decline in 2019. However, the impact of the launch of 5G devices and services will fully reflect in 2020,’ Shobhit Srivastava, Research Analyst at Counterpoint Research, said in a blog post.

A slowdown in the developed markets due to a longer replacement cycle, increasing sales of refurbished devices, the lack of 5G iPhones, and the US’ trade ban on Huawei are some of the reasons that have been identified for the decline of smartphone sales globally. The market research firm estimates that smartphone shipments in 2019 will decline by 3 per cent year-on-year (YoY).

Srivastava says that the untimely ban on Huawei has left a big mark on the global smartphone market. However, Huawei has increased its market share in China to counter the decline in overseas markets. The brand has already shipped over 115 million smartphones in H1 2019. Further, in emerging countries, many mobile phone users are not buying a new phone and rather opting for a second hand or refurbished phone. Mature markets have also seen a more organised and efficient refurbished and used devices marketplace.

‘Close to 140 million refurbished phones were sold in 2018, showing marginal growth. This put a dent in the demand for new handsets, and as a result, shipment for smartphones declined 4 per cent year-on-year (YoY) in 2018. Regions seeing the highest volumes include the US and Europe. The fastest-growing markets for refurbs include Africa, South East Asia, and India. These volumes are now considerably past rounding errors and are affecting growth rates,’ the firm added.

The decline in 2019 is also attributable to growing average selling prices (ASPs) of the premium tier with higher quality hardware, which will continue to increase holding periods. Initially, operators providing subsidies on high-cost 5G devices -- to poach in early users -- will help push 5G device shipments. The prices of such devices are estimated to decline in 2020 and will further increase the adoption.